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Work norms, social insurance and the allocation of talent

  • Corneo, Giacomo

This paper challanges the view that weak work norms in generous welfare states makes them economically unsustainable. I develop a dynamic model of family-transmitted values that has a laissez-faire equilibrium with strong work norms coexisting with a social-insurance equilibrium with weak work norms. While the former has better incentives, the latter induces more intergenerational occupational mobility which improves the allocation of talent and fuels growth. Strong work norms arise as a defensive strategy of parents that aims at perpetuating their occupation along family lines. I present evidence from microdata showing that generous social insurance correlates with high intergenerational occupational mobility and that more mobile individuals endorse weaker work norms.

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Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2013/12.

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Date of creation: 2013
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Handle: RePEc:zbw:fubsbe:201312
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  20. Arcidiacono, Peter, 2002. "Ability Sorting and the Returns to College Major," Working Papers 02-26, Duke University, Department of Economics.
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  26. Alberto Bisin & Thierry Verdier, 2000. ""Beyond the Melting Pot": Cultural Transmission, Marriage, and the Evolution of Ethnic and Religious Traits," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 955-988.
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